El Nino rains help inflation drop to 20-month low

The destructive El Nino rains have helped slow down the increase in consumer prices to a 20-month low as prices of vegetables and livestock products dropped, according to data from the Kenya National Bureau of Statistics (KNBS).

Inflation—a measure of increase in consumer prices over a 12-month period—has dropped to the levels last seen in April 2022 when it was at 6.47 percent.

This means that inflation has for six months remained anchored within the Central Bank of Kenya’s target of between 2.5 percent and 7.5 percent.

Inflation breached the CBK’s upper limit of 7.5 percent for 12 months to June this year, leading the financial regulator to aggressively try to stabilise price increases by tightening the supply of money.

In November, inflation was at 6.9 percent, having risen from 6.8 percent in the previous month. 

“The overall year-on-year inflation rate as measured by the Consumer Price Index (CPI) was 6.6 percent, in December 2023,” said MacDonald Obudho, the Director General for KNBS in a statement.

“This was mainly driven by increases in prices of commodities under Transport (11.7 percent); Housing, Water, Electricity, Gas and other fuels (8.3 percent); and Food and Non-Alcoholic Beverages (7.7 percent) between December 2022 and December 2023,” added Mr Obudho in the statement released on Friday.

However, the food inflation index rose by 0.3 percent in the review period compared to an increase of 0.4 percent observed between October and November 2023. 

The price of a two-kilogramme packet of sifted maize flour—critical for the preparation of ugali, which is a staple in most Kenyan households—dropped by 14.9 percent to retail at an average of Sh155.07 from Sh182.14 in December last year.

Retail prices of fortified maize flour, loose maize grain and loose maize flour also dropped by 14.4 percent, 9.1 percent and eight percent respectively, the latest data from the statistics office shows.

“Prices of carrots, kale “sukuma wiki”, mutton/goat meat and beef with bones increased by 14.5, 6.2, 5.1 and 3.6 percent, respectively between November 2023 and December 2023,” said Mr Obudho.

Month-on-month, prices of most food items including mangoes, Irish potatoes, sugar, tomatoes, wheat flour and milk dropped, pointing to the impact of the El Nino rains in December.

However, Kenyans continued to grapple with higher prices of electricity and fuel, though month-on-month, pump prices of petrol and diesel dropped by 2.3 and one percent respectively. 

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